After the Sands: How will Canada weather a low-carbon future?

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This week, is presenting a set of excerpts from a new book that lays out what Canada's political parties have not: a plan to transition Canada to a low-carbon society.

After the sands: Energy and Ecological Security for Canadians is a roadmap for meeting two goals: ending oil and natural gas exports and ensuring that all Canadians get sufficient energy at affordable prices in a carbon-constrained future.

The book's author, founding director and former head of the Parklands Insitutute Gordon Laxer, has picked out excerpts from his book that will inform the debate about Canada's energy future. We'll be presenting them this week at Here is the first excerpt: 

U.S. Energy Security and Independence

Delighted that George W. Bush was gone, progressive Canadians' fears of losing Canadian sovereignty and being further integrated into the us lessened after Obama changed the face of America. But Democratic presidents such as Kennedy and Clinton have not recognized Canadian and Mexican

sovereignty any more than Republican ones. Obama is not attuned to Canadian sovereignty issues either. Meanwhile, despite Harper's empty rhetoric about Canada as an emerging energy superpower, Canada is still committed to being America's gas tank and ensuring us, not Canadian, energy security. 

South of the border, you can't avoid hearing weekly laments about us dependence on foreign oil and promises to end it. A 2011 Pew poll found that 91 per cent of Americans agreed that us dependence on foreign oil was a very or somewhat serious threat, with 61 per cent picking "very serious." Invoking the spirit of 1776, Republican and Democratic politicians regularly promote us energy independence. Democrats have celebrated the Fourth of July as "energy independence day." Several Republican presidents have promised that the U.S. will never again be held hostage to oil supply cut-offs.54 (Especially on the Conservative side, Canadian politicians often copy their American counterparts, but not on national energy independence.)

In his 2006 State of the Union address, President Bush declared that "America is addicted to oil, which is often imported from unstable parts of the world." He pledged to "replace more than 75 per cent of our oil importsfrom the Middle East by 2025." He did not, however, take steps to enable the country to recover from its addiction by bringing American oil use down to its national oil output level. Obama's promises went further than Bush's. Obama pledged to cut all oil imports from the Middle East by 2018. He added Venezuela to the cut-off list. American net oil dependence hit 60 per cent in 2005, the year before Bush's "oil addiction" speech. Oil dependence is forecast to fall to 27 per cent in 2015. Why the turnaround? 

U.S. oil demand has been falling since the Great Recession began in 2008, while domestic crude oil production and liquid fuels, including gasoline from natural gas, are climbing.56 Still, the us is not forecast to become petroleum self-sufficient. us profligacy makes it still hugely oil-insecure and pushes it

toward trying to find oil under someone else's sands. Unlike Canada, the us has a National Energy Policy (nep). Developed in 2001 and revised in 2007, it boldly proclaims national "energy security," "self-sufficiency," national ownership and control of petro-corporations. Washington hounded Canada to ditch its nep. It is ironic that the us now asserts similar economic nationalist themes for itself. Most people are in denial about the scale of changes needed to seriously tackle climate change threats and the depletion of easy oil. They hope new technologies will come along and make the problems go away. Every us president since Nixon has promoted complacency by promising technological fixes and us energy independence. Jimmy Carter (1977-1981) was astonishingly ahead of his time by being the only president to take conservation and the environmental damage caused by carbon fuels seriously.

In 1970, Richard Nixon began the "technology will save the day" tradition by declaring that he was "inaugurating a program...with the goal of producing an unconventionally powered, virtually pollution-free automobile within five years." George W. Bush painted fanciful pictures of new technologies and

new energy sources, shimmering just over the horizon, and rebranded coal "clean." Comparing raising fuel standards to Kennedy's man-on-the-moon project, Obama's plan raises the efficiency of America's cars and trucks from 25 miles per gallon to 35.5 on model years 2012 to 2016. The fuel standards include trucks and suvs for the first time. The plan is supposed to cut 1.8 billion barrels of oil use over the lifetime of the vehicles sold. It's a far less inspiring goal than Obama's oratory suggests. In 2008, Europe, Japan and even China had already exceeded Obama's 2016 efficiency target. The program's end date conveniently falls at the end of Obama's second term. 



Obama later extended us efficiency standards to an impressive 54.5 miles per gallon by 2025. If future presidents hold to them, the standards will cut us oil use for cars and light trucks in half. It would take until 2035 for the full effects to be felt. New vehicles stay on the road for at least ten years. Vehicle efficiency gains alone, though, will not end us oil imports. Cars and light trucks make up only 45 per cent of total us oil use. Obama's conservation plan is a start, but current us leaders fail to tell the public it will not simply be a matter of switching to new green-energy sources and electric cars and carrying on as wastefully and intensively as before. Americans will have to drastically reduce energy use. Dishonesty about the coming end of the era of easy oil is a failing in Canada, too. 

Natural Gas and Canada's Recklessness

Natural gas is different. The temporary boost from shale, fracking and horizontal drilling pushed us natural gas production higher than it's ever been. The us is forecast to become a net natural gas exporter by 2016. With one-fifth of world production, the us could easily end imports and become self-sufficient.

It will likely import some natural gas, though, even as it ramps up exports.

Fracked oil and Alberta bitumen are non-conventional oil. Hydrofracturing (fracking for short) involves drilling into shale formations and injecting water, sand, ceramic and about 750 chemicals, such as hydrochloric acidand peroxodisulfates, under high pressure. It prevents fractures that open to release gas in tight formations from closing again when injections stop. Fracking is very contentious. Industry sees it as a great way to unlock oil and natural gas that would not otherwise be available. People who live in fracked areas often see it as an environmental disaster. Companies frequently hide the toxic chemicals they use in fracking.

Scientist Robert Howarth and his colleagues at Cornell University found that shale gas's ghg footprint is between 20 and 100 per cent greater than coal's over twenty years. Their report contradicts the conventional wisdom that natural gas is the cleanest carbon fuel and should replace coal to generate electricity. Most us natural gas imports come from Canada. But they're falling and will continue to decline as Canadian production falls and us shale gas displaces them. The pace of Canada's natural gas exports is unsustainable, even reckless. Canada cannot long remain the world's fifth-largest producer and fourth-largest exporter of natural gas. Canada has only one per cent of global natural gas -- ranking twenty-first in the world. Canadian output has fallen by a quarter since peaking in 2006.

Canada will have some domestic gas well into the future. Coal-bed methane, a far worse polluter than conventional natural gas, will offset some of Canada's shortfall. But adding coal-bed methane to new conventional gas finds will still likely result in decline. Shale gas in bc's northeast region holds much promise, as do deeper, more productive conventional, tight and shale wells. It's not a matter of having no Canadian natural gas in future, but of not having enough, and not at a price low- and middle-income people can afford. 

If Canada rapidly depletes its domestic natural-gas stock through liquefied natural gas (LNG) exports and wastes its supply on heating Alberta's bitumen, Canadians will likely depend on gas imports from sketchy suppliers like Russia and Algeria to stay warm in winter in the 2020s. Canada squandered 1.5 billion cubic feet of natural gas a day in 2012 to make dirty Sands oil, the majority of which was exported to the us. Bill Powers, a Calgary-based energy analyst, forecasts the Sands will burn up 2 billion cubic feet a day in 2015, using almost 20 per cent of Canada's total natural gas output.64 Jim Dinning, Alberta's Treasurer under Conservative premier Ralph Klein, likened using natural gas in the Sands to reverse alchemy: "Injecting natural gas into the oil sands to produce oil is like turning gold into lead."

Americans don't need Canada's natural gas. We do. The sensible thing for Canada is to quickly phase out exports, seriously cut domestic use and phase out Alberta's Sands. If we do these things, Canadians can have natural gas supplies for decades as we transition off carbon fuels.

US Oil under Someone Else's Sands

Jimmy Carter was the only us president in the past fifty years prepared to make his country oil-independent in the only serious way—through major conservation so the us could live off its own domestic supply. Between Carter's green offensive in 1977 and Ronald Reagan's freezing of fuel efficiency standards in 1986, the us economy grew by 27 per cent, yet oil demand fell by a sixth.  

Economies can grow while oil use falls. If subsequent presidents had held Carter's course, the us would be energy-independent and the globe's environmental leader today. The Gulf wars to secure oil might not have happened. We look at Carter's plan in more depth in chapter 2. Ironically, Carter's plan, similar action in Europe and Japan, and the demand-killing effects of oil price spikes were too successful. Oil use fell and cheap oil returned for two decades. Conservation and new oil finds that high oilprices made economically feasible undercut opec's power. Reagan revelled in cheap oil's return and removed Carter's solar panels from the White House roof. Rising oil imports and greater oil insecurity resulted. Colossal us energy waste was back.

So was the return to finding "American oil" under someone else's sands. Jeff Gotbaum, a Bill Clinton regime official, told the Senate Foreign Relations Committee that the 1991 "liberation of Kuwait cost $57 billion or twenty-five cents a barrel of oil." Dan Plesch, a British security expert, considers that figure ludicrously low. The 2003 invasion of Iraq, the second Gulf War, was even more extravagant: "America's annual spending on the military and intelligence was around $400 billion and $40 billion respectively in 2004--5. About a quarter of this -- or $120 billion -- is focused on securing Middle East oil supplies." When America's allies costs are included, the tariff on trying to secure Middle East oil was over $20 a barrel, Plesch calculates. It was a failed strategy. Iraq's oil output fell by half after the invasion and did not return to its year 2000 level until 2011. Imperialism fosters us oil dependence.

US Debate, Canadian Election

Washington counts on Sands oil to help wean the us off opec oil. But Sands oil cannot be produced with as low a carbon footprint as conventional oil. A powerful us movement to block "dirty" Alberta oil is growing. California's Low Carbon Fuel Standard, begun in 2007, will require oil companies to

incrementally reduce the carbon footprint of all the steps in the fuel's production and usage by 2020.68 In 2007 as well, the us Energy Independence and Security Act forbade federal agencies, including the military and the post office, from buying synthetic fuel whose life-cycle ghg emissions in making and combusting the fuel is more than those of conventional fuel.69 The act clearly referred to Sands oil. Big

Oil and its Congressional supporters have tried repeatedly to repeal it. Washington hasn't enforced it. 

In an interview with the CBC's Peter Mansbridge, Obama brushed off concerns about massive carbon emissions from the Sands with the dubious assertion that carbon sequestration can solve their problems. "Oil sands creates a big carbon footprint. So the dilemma that Canada faces, the United States faces and China and the entire world faces, is how do we obtain the energy that we need to grow our economies in a way that is not rapidly accelerating climate change." American officials usually frame reducing "dependence on foreign oil" in national terms. Nevertheless, when Washington pledges to get off "foreign" oil, it doesn't mean getting off Canadian or Mexican oil.

What will Washington do if Canadians elect a federal government that phases out oil exports to the us and redirects the oil to Eastern Canadians? Canada did that after the 1973-74 oil crisis. Tough environmental action on the Sands is inconceivable under Harper. If a minority ndp or Liberal government has the fortitude to strictly enforce environmental laws on the Sands and the oil companies cannot comply, resulting in the Sands being phased out, could the us get by? Canada supplies 28 per cent of us oil imports, almost equal to the 29 per cent from Persian Gulf states and Venezuela combined.

Phase Out Exports and Sands Oil

Phasing out the Sands and reserving domestic conventional oil for Canadians' use means ending Canadian oil exports to the us. It would be more difficult for the us to end oil imports from the Middle East and Venezuela. But because of timing, phasing out the Sands may not undermine the us plan much. Capping and then phasing out the Sands will take fifteen to twenty years, enough time for rising us fuel efficiency regulations to cut oil use substantially. Washington would have time to find new oil import sources. As a global power, the us has a security strategy of using many import sources, not relying on a single seller. 

If Canada sends Eastern Canadians conventional domestic oil, it would free up several hundred thousand barrels a day that Canada imports. The us could import that oil or its equivalent. Once the first major international oil-supply crisis hits, Canada will have no choice but to provide for its own residents first. When author William Marsden asked the late Peter Lougheed, former Conservative premier of Alberta and a prime booster of the 1989 Canada - U.S. Free Trade Agreement, whether Canada would stick to nafta's mandatory, proportional, energyexporting rule if Canadians ran short of oil, Lougheed replied, "If for some unusual reason we have a problem with supply, I think what would happen is the Canadian parliament, including support by the government of Alberta, would say, 'We've got to serve the Canadians first." Lougheed thought the possibility remote.

Although us policies are inadequate to deal with energy security and sovereignty, climate disruptions and the end of non-fracked conventional oil, at least Americans debate and link those issues. Not Canadians. Many harbour frontier myths that Canada has so much land and resources that it can with impunity dump massive toxic wastes and tear off the boreal forest to get at Sands oil. Thinking they won't run out soon, we export the majority of our conventional oil and natural gas. Many Canadians support Sands expansion although they know it is dirty, because they've been convinced it's the best way to create jobs.

According to a 2014 Environics poll, 41 per cent of Canadians think the Sands contribute six to twenty-four times more economically than they actually do. Canada ignores the insecurity of importing so much oil and assumes the imports will always be there. These assumptions are wrong. Canada exports oil because the influential, foreign-dominated petro-elites know that exports mean greater profits. Canadians believe the us needs our energy, when with determination the us could become energy-independent. But Canadians need Canadian energy. Americans don't. To make the transition to a low-carbon society, Canadians must first change what's in our heads. Then we can confront the petro-elites that block the way.

Plenty of Public Ownership, None Canadian

Everyone is nationalizing their oil industry. Even former us Vice-President Dick Cheney acknowledged it. "Governments and the national oil companies are obviously controlling about ninety per cent of the assets. Oil remains fundamentally a government business," he mourned. Most of the world's oil is off-limits to foreign and private investments. Canada is one of the odd ones out. With the exception of Newfoundland, governments in Canada are not getting into owning and controlling oil and natural gas companies for the benefit of their people. Canada is one of the few oil-rich places left that is open to foreign ownership and control. Jeff Rubin, former chief economist at cibc, calculates that Alberta's Sands represent 50 to 70 per cent of all the private investable oil reserves in the world. That's why foreign, state-oil corporations flock to Alberta.

There's plenty of public ownership in the Sands. "The only problem," notes Diana Gibson, former Research Director of Parkland Institute, "is that none of it is Canadian." She explained that citizens of Norway, China, South Korea, Japan, Abu Dhabi, Thailand and India profit as owners of Alberta's oil. "Public ownership is the best way to capture royalties, as 100 per cent [wouldgo] to the owners, the people of Alberta. It is also the best mechanism for ensuring appropriate development of the resource." But oil security for their country, not profits, is the main reason so many state-owned oil corporations invest in the Sands. State-ownership stakes in the Sands have included some of the biggest state-owned corporations:

  • China's National Offshore Oil Corporation (CNOOC) bought Calgarybased Nexen in 2012, giving it a major stake in the Sands. CNOOC also has holdings in Sands producer MEG Energy Corp. 
  • In 2012, PetroChina, also state-owned, expressed interest in buying into Enbridge's proposed Northern Gateway pipeline, which would likely ship much Sands oil to China. PetroChina bought Athabasca Oil Sands Corporation in 2009.
  • Sinopec, another Chinese state oil company, joined with Synenco to form the Northern Lights project north of Fort McMurray and planned an upgrader.
  • Statoil, two-thirds owned by Norway's government, bought North American Oil Sands Corporation. Thailand's state-owned PTTEP bought into StatOil's Kai Kos Dehseh, another Sands project. 
  • State-owned Korea National Oil Corp (knoc) bought Newmont Mining's Black Gold project in 2006 and Harvest Energy Trust in 2009. Both have Sands holdings. knoc aims to get Sands oil for energy-insecure South Korea.
  • Abu Dhabi's taqa, a majority state-owned company, bought threeSands companies in 2008.

The Harper government limited national oil company takeovers of petro-corporations after China's cnooc bought Nexen and Malaysia's Petronas took over Progress. Ottawa will bar such takeovers in future to "safeguard Canadian interests," allowing only minority control. That's good, but why limit safeguards to foreign state-owned interests? Equally concerning is so much ownership and control by privately owned foreign transnationals, such as ExxonMobil and Shell. They form a formidable, internal petro power bloc with local politicians that unduly influences Canadian policies over what domestic resources to exploit, their toxic ecological consequences, and who benefits from setting royalties and taxes on unearned, public natural wealth.

Concern about foreign control is a prime reason why so many Canadians -- 51 per cent in a Leger poll in 2005 -- favoured public ownership of Canada's oil and natural gas companies. If governments in Canada were responsive to their citizens, they would set a new legal framework to ensure that oil and natural gas companies serve Canada's public interest. Non-profit, enviro-energy companies could be incorporated under rules mandating them to wean consumers off carbon fuels, coax them onto renewables, and secure sufficient energy supplies for everyone.

Fanciful, False Futures

Governments delude citizens with false futures. It is a mirage that Canadians have unlimited oil and natural gas supplies and can afford to export the majority of them and not replace current oil imports with domestic conventional oil. The Sands will not save the day. Unless a miracle happens and their carbon footprint and horrific impacts in northeastern Alberta, a quarter of the province, are reduced to those of conventional oil, pressure to stop Sands expansion will grow.

It is ironic that Washington rather than Ottawa promises oil independence. If realism ruled, it would be the reverse. Given the Americans' record depletion of their once incredibly bountiful energy supplies, they cannot have cheap oil, very low gasoline taxes and a ludicrously wasteful energy lifestyle for much longer and gain national energy independence. On the other hand, Canada has the resources but needs the political will to become energy-independent, provide a secure minimum of energy to all its residents and become a lowcarbon society run on renewables. Canadians should quickly join the paradigm shift that is sweeping across Western Europe. The end of abundant carbon fuels is near. Canadians must alter lifestyles built around cars and challenge the power of foreign state-owned and privately owned petro-transnationals. The longer we delay, the more catastrophic the fall will be.

With half of one per cent of the world's people, Canada emits over two per cent of its ghgs. When Canada signed the Kyoto Accord in 1996, it was committed to cutting GHG emissions to 555 million tonnes, six per cent below their 1990 level, by 2012. Instead, Canada spewed out 699 million tonnes, 26 per cent above that level, in 2012. Sands emissions are responsible for 36 per cent of the growth of Canada's GHGs since 1990. In 2011, they emitted 55 million tons, the equivalent of nine million cars. Although the Sands accounted for only eight per cent of Canada's GHGs, their emissions are expected to rise sharply as Sands' output grows and other uses fall.

When you destroy swaths of Alberta's boreal forest to get to the bitumen, a great deal of carbon is released, there is no forest to act as a carbon sink, and a lot of natural gas is burned making synthetic crude. Canada cannot greatly cut carbon emissions while the Sands keep expanding. Oil production is the fastest-growing source of Canada's ghg emissions, but 70 per cent of domestic oil is produced for export. This means that when Canadians use way less oil, Canada's GHGs will not fall as a result. NAFTA's virtually mandatory exporting rule severed the umbilical cord between oil output and oil use in Canada.

This week, is presenting excerpts from After the Sands, as selected by its author, Gordon Laxer. 

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